A common fear is that multiple inquiries on your credit report will lower your score. That's partially true, based on who's doing the inquiring. If you're shopping for a car or home loan, inquiries won't lower your score. But if a landlord or credit card company takes a peek at your credit report, it's a different story.

Beauty is in the eye of the beholder. But bad credit usually looks the same to everyone, especially credit bureaus.

Credit scores were developed to provide an objective method for evaluating a person's creditworthiness. The scores are based on your ability to make monthly payments, along with your current debt load. The better your credit, the higher your score will be, and the greater your chances of getting a loan.

Your credit report will be examined when you're trying to secure a loan, rent an apartment, and even get a job. There are cases when these inquiries can hurt your credit score, but only if your score history is already in rocky shape.

The good, the bad, and the inquiry

Because credit inquiries are so commonplace, credit bureaus don't lower a score if a number of credit inquiries are made when shopping for a car or a mortgage loan. These inquiries, if grouped within 45 days, will not have a negative effect on your credit report.

Inquiries by a landlord or a credit card company won't have an impact either, unless they occur frequently. If new landlords are inquiring every three months because you're always being evicted, or if you're constantly looking for new credit cards because of increasing debt, you can expect to see your score suffer.

Keeping your rating high

Generally, the inquiries that affect your score are part of a larger problem, such as increasing debt loads and mishandled finances. To maintain a high credit score, you can follow a few simple tips.

Pay your bills on time. It seems like a simple enough rule, but it's easy to lose track of payments. Try to register for automatic withdrawal on your accounts to ensure prompt payment, especially mortgage and auto loans, which carry extra weight on a credit score.

Open two or three credit cards and be sure to keep your balance well below your limit. Credit bureaus don't like heavy debt loads, and they look favorably upon people who pay off their balances each month.

Keep track of your own credit report to make sure that it's accurate and contains no mistakes from creditors.

If the eyes are a gateway to the soul, a credit score is a close second-especially for creditors. With a quick glance at a person's score and report, a lender or landlord can make a quick assessment of a person's creditworthiness. As a result, inquires are to be expected, and regular ones are a part of a normal business transaction. As long as you keep your credit in good shape, your score will stay high, and those inquiries won't affect you.

Published on April 26, 2008